Session 4: Emergent Institutions

As you know, I have served as Assistant to Former Minister of Environment, Klaus Topfer. Professor Topfer established an office, prior to Rio, in order to become the focal point in government to prepare for the Rio conference.

At that time, there were only very few people in our government and outside the government who really were aware of the significance of this process leading to and emanating from Rio. Some of my colleagues even went so far to say, "Topfer has just created a nice division for his former personal assistant." But I think times have changed rather quickly. The division grew well, assembled more people, more reputation, and has even matured enough to participate in a meeting like the one today here at MIT -- with so many eminent, important persons and personalities that have been involved in this process.

As this is my first opportunity to speak at MIT, and it is a very important institution, well-known and highly respected also in Europe, you can imagine that I have prepared a rather longer introduction. But in light of this morning's experience, where we ran very short of time and could not even really discuss the very good contributions that we heard, my task this afternoon as chairman will be to exercise discipline and to be extremely short in my introduction.

I will leave further explanations and further analysis of developments since Rio -- be it in the area of the global conventions, be it in the area of new partnerships, new mechanisms, on finance but also in the private sector, in the science community, in the academic community -- to our other speakers of this afternoon.

I am very delighted to introduce our keynote speaker for this second session in the afternoon, Elizabeth Dowdeswell, and I think she is known to all of you. She is the third Executive Director to the United Nations Environmental Programme, as of 1993, rather immediately after the Rio conference and setting in motion the massive restructuring program at the UN in order to make it more fit to cope with the questions of environmental protection and sustainable development.

Before joining the UN, Ms. Dowdeswell served for the Canadian Environment Ministry in many functions. She was the principle delegate of Canada to the negotiations on climate change, both in the IPCC and in the Convention negotiations, and that was the time when I had the pleasure to first meet her.

So, I am very delighted now, Liz, to hand over the floor to you, and I'm sure we will learn a lot more when you discuss the question of global conventions and major regional initiatives.

Thank you very much, Cornelia, and welcome, and good afternoon, ladies and gentlemen. As Cornelia says, I think all of us this afternoon have the double complication of having heard so many rich interventions and speeches this morning, and having had a full lunch on our plates as well, that keeping those of you before us awake may be a bit of a problem this afternoon.

But, nevertheless, may I begin by certainly congratulating and thanking both Nazli and MIT for the initiative and for what is a real luxury as well as a necessity to allow us to focus for two days on the assessment of where we have been, where we are going, and indeed, what progress we are making, so my thanks to you for that.

Mid-Term Correction
In the coming months, we have the opportunity, I think, throughout the entire international community to make mid-term corrections on the basis of the kind of assessment that we're beginning today. It is certainly clear to me that such an assessment, such a mid-term correction, will be necessary.

The interests of the environment are definitely not yet being addressed effectively. Yes, we have major progress that's been made in increased awareness, knowledge, technology, in new approaches to environmental policies, in terms of new partnerships, and certainly tremendous environmental problems remain. Jonathan Lash, this morning, so richly illustrated the range of problems that are still on our plate, and these problems are deeply embedded in the economic situation of many regions of the world.

There are new problems that are emerging, and I guess my analysis, the bottom line, would be is that the progress is simply too slow. You heard this morning that in fact, what we needed was a significant and major shake-up. While some shy away from the phrase "a new world order," something of that in at least the minds of many people in the world is what's actually necessary. Many perspectives and diverse experiences must be brought to bear in the process of piecing together this jigsaw puzzle of the post-Rio process.

The interlinkages between technological innovation and the institutional mechanisms the international community is putting in place in pursuit of sustainable development form an extremely important part of the picture.

Changing Landscape
I just wanted to focus on one example of a changing landscape that is going to require us to do some rethinking, an example that I do not think was as apparent to all of us at the time of Rio as it is now. In the post-Rio period, turning the global economy around has become our major preoccupation. The conclusion of the GATT Uruguay round is a key example.

Though GATT presented some areas of clear overlap and mutual support with UNCED, recognizing for example that economic growth is fundamental to development, there are still some clearly unresolved tensions between the two visions of how society is to be organized as we move forward into the next century.

New Trade Regime
The new trade regime is expected to contribute an annual additional US $500 billion per year to the global economy. The overall volume of merchandise trade is expected to increase by 10-20 percent. Now, obviously, from an economic perspective, that kind of change is welcome, but economic activity can also be a helpful indicator of the disruption by humans of the natural equilibrium of the planet.

Growth often takes place in ways that are not environmentally sustainable. And, of course, most of the economic benefits arriving from GATT are anticipated to accrue to the north which already consumes the bulk of the world's natural resources. As big a concern is the growth and consumption in the North, but that is only half the equation, with the other half being the population growth at the same time in the South. So, from a global environmental perspective, an important question that must be asked is to what extent can critical ecological thresholds withstand this kind of economic change and expansion.

Losing Ground?
It may be a little harsh, but I think it needs to at least be explored, that as power slips from our natural democratic institutions to the marketplace, another question that we have to ask ourselves is whether or not we're actually losing the ability to control forces that are impoverishing both people and the planet. Among the many areas where there's important evidence of this, one results from the imperatives of the global economy in combination with the inevitabilities of technological innovation.

If a new technology can satisfy the market's appetite for greater efficiency, then it must be employed almost regardless of its environmental risks or social implications, and no country, no company, and certainly no individual seems to be able to do anything about it. In fact, it is quite ironic that just as the light of democracy has begun to illuminate every previously dark corner of the world, our democratic decision-making power is on the verge of becoming redundant in the global economy; that the shape and character of human society should be beyond human control.

In my view, this factor amplifies the need for global accords as a means of regaining some measure of control collectively over our impact on the planet. But that being said, Nazli asked me specifically to say something about the emergence of international environmental law. I will try and do that very briefly, but I do want to also add a word about institutions along the way.

International Environmental Law
In 1972, a concern for environmental security resulted in the creation of a new international institution, the United Nations Environment Program and the start of negotiations toward a number of environmental conventions. For example, in 1973 we saw the emergence of CITES, the convention on international trade and endangered species. Now, if you move fast forward to 1992, and even 1996, the recognition of environmental threats and the need to find appropriate policy responses had now become a truly global phenomenon.

Existing Institutions
You can see, as so many others this morning have suggested, existing institutions were intended to be strengthened, a legal response continued to develop, to be in the Rio declaration, the conventions on climate change and biodiversity, an emerging consensus on forest principles, the need for negotiations to combat desertification, and on the horizon, a new global program of action to deal with land based sources of marine pollution, and a recognition of the emerging importance once again of the chemical agenda.

New Institutions
We also saw regional problems being addressed in a very focused way such as with legally binding frameworks of cooperation in southern and eastern African states to combat effectively illegal trade in wildlife. We created new institutions -- a high-level political forum to monitor progress on sustainable development (the CSD), and a new financial mechanism, the global environment facility.

Greening of Institutions
As well, and perhaps as importantly, 1992 certainly spurred the greening of organizations. Organizations such as the World Bank and UNDP which had always, to some extent, been involved in environmental matters, chose that opportunity to really make it a focal point of much of their new development. And, indeed, Rio itself, as others of you have commented, opened the door much wider for the civil society to be able to really make a contribution.

So on the surface it would appear then that the world has indeed responded to environmental concerns. I want to look particularly at the issue of the remarkable achievements in international environmental law.

It is increasingly today evolving in the direction of what some would call international law for sustainable development, and that is because it has shown itself to be one of the most effective instruments in building and enhancing a consensus in the world community, in addressing the most pressing global issues of the day.

We are now beginning to see some concepts and principles which I believe are distinct characteristics of this new evolution if you compare it to the very limited body of environmental law that we had some twenty years ago. It is self-evident that international environmental law has left behind its purely physical parameters of environmental protection and the problems it must regulate. And so we see that new and emerging international environmental instruments and the negotiations for these instruments routinely consider and integrate socioeconomic dimensions with environmental issues.

Law & Uncertainty
One phenomenon of international environmental law which was revealed during the negotiations of the ozone instrument, as well as the Climate Change Convention, is that more and more we are having to negotiate these legal instruments in circumstances of scientific uncertainty. Thus, we are faced with the challenge of finding ways of developing instruments that are flexible and capable of accommodating change as the scientific evidence becomes much clearer. This precautionary approach is a relatively new trend in law which I believe is going to continue. Flexibility and innovation are increasingly evident in new and emerging environmental legal regimes. If you look at both biodiversity and climate change, we'll see examples of that.

FCCC
The Framework Convention on Climate Change, for example, for the first time brings about a concept known as common but differentiated responsibilities as well as enshrining in law the matter of the precautionary principle, where it actually says that lack of full scientific certainty should not be used as a reason for postponing such measures.

CBD
The Convention on Biological Diversity is also significant in its ambitious scope and innovative approach. That Convention is at the forefront of progressive development of international environmental law based on comprising a number of concepts that are really new in the field of law. These include: common concern of mankind, global partnerships, common but differentiated responsibilities, valuation of biodiversity; and this particular convention, as well as some others, contains innovative funding and technology transfer mechanisms and of course has implications for such broad areas as intellectual property rights through biosafety.

COPs
Another indication of the flexibility in this body of law is the beginning characterization of many of the Parties to the Convention, and so we see enshrined in law, concepts such as countries with growing economies, countries in transition, and not just "developed" or "developing." Article six, for example, of the Climate Convention allows parties undergoing the process of transition to the market economy a certain degree of flexibility in dealing with the convention on biological diversity. Again, countries undergoing this process of transition are allowed certain assumption of obligations at a later date.

Implementation
The unique nature of the implementation of international law in the field of sustainable development is also worth commenting on. What we see in recent environmental treaties is not only the setting of ambitious goals, but also the creation of supportive means for the achievement of these goals through financial mechanisms and transfers, technology transfer, and capacity-building.

Non-Compliance
The non-compliance mechanism that's formulated, for example, in the Montreal Protocol enhances implementation by seeking amicable solutions to complaints of non-compliance. These are just a few of the examples of the ways in which law is gradually becoming more facilitative and supportive with a notion of achieving real implementation. Indeed, environmental, legal regimes more and more often complement prohibitive and restrictive mechanisms with a wider use of stimuli and incentives aimed at dispute avoidance rather than dispute resolution.

Capacity-Needs
More attention is being given to institutionalizing the implementation capacity through effective reporting, monitoring, and assessment systems and establishing multilateral consultative processes for resolving the difficulties that are faced in implementing an instrument.

Interconnections of Instruments
As I said before, as international environmental law moves in the direction of sustainable development, we are increasingly looking at the interrelationship between environmental and socioeconomic instruments.

Holistic Approach
The focus on sustainable development clearly requires a much more holistic approach than we have taken in the past as an alternative to a narrow and fragmented focus.

For example, we're beginning to look at major international environmental conventions that contain trade provisions, and while I would take some issue with the characterization that Ambassador Katz used this morning on some issues, he nevertheless is correct in saying that we are being pushed forward not only by the government community but by the private sector as well to make sure that there is a level playing field, there are common ground rules in which we can all function.

When negotiated, the trade provisions of some of our agreements were viewed very narrowly, but with the evolution of the WTO and the newly emerging Trade and Environment Regime, we've started to think about the nature of those trade provisions and the complex issue of defending their role in international environmental instruments.

The one point I would like to make is that it's very important to realize that the sovereignty of national governments in negotiating and signing the WTO and the Uruguay round agreements is no greater, or less, than the sovereignty of the same national governments who negotiate and sign multilateral environmental agreements.

Partnership Concept
Another characteristic of emerging environmental law is the concept of partnership. There is a greater recognition of the need for the widest possible partnerships of nations and peoples in addressing the issues of environment and sustainable development.

I would be very surprised if in our panel discussion later there wasn't reference made to one of the key factors in the success of the Montreal Protocol being that we in fact brought industry and business to the table at the outset, and for whatever reason, altruistic or not, the fact is that the government community and the industrial community learned at the same time and ultimately brought about a better and more successful instrument because of that partnership.

Clearly, effective partnership requires heightened public awareness on the issues of sustainable development and environment. It's not surprising that we now start to see a call for and consequent negotiation of new legal rights which ultimately help to cement these partnerships.

For example, there has been a good deal of discussion regarding the fundamental right to a healthy environment. It has been argued that the right to a healthy environment is an extension of the right to life. States are thus under a moral duty to pursue policies which are designed to insure access to the means of survival for all individuals and peoples.

Specific Rights
More specific rights are being incorporated into international environmental law. Again, let me use the Convention on Biological Diversity, which calls upon contracting parties to respect, preserve, and maintain the knowledge, innovations, and practices of indigenous peoples and local communities, or the resolution which accompanies that negotiation and which addresses the question of farmers' rights.

The traditional structure of international environmental law emerged out of a political configuration much simpler than what exists now. The very circumstances that necessitated the growth of an international legal order for environment makes its further development far from easy. The issues were fewer and much more manageable, the forms of political and economic action much less diverse. It seems to me that the most significant question to be asked -- and one that I would put to the panel -- is: What effect are these laws having?

Moving On
The easy part, indeed, has been done. The endless hours of negotiation have resulted in a fine legal text, but now what? How do we make them work? I do not believe that we as yet know how to insure full compliance. The treaty machinery has limited resources and authority. Secretariats are faced with delinquent payments and lack of complete and timely information.

I question whether an enabling environment really has been created. Have finances and technology really been transferred? Are the partnerships mobilized to their full potential? Have we tapped effectively new technologies that are available to us -- for example, in the field of information networks -- and certainly the use of powerful trade measures is coming under question and there are, of course, delays in executing projects. These are just at the international level.

Of course, any international agreement is only successful to the degree that national governments have and exercise the capability and the political will to act.

A related question worth asking is: which issues are best served by formal, legally binding agreements? And, which, on the other hand, benefit more from what I would call soft law, codes of conduct, standards, guidelines?

International Guidelines
The case of international guidelines in biosafety is constructive. It takes years to negotiate a legal protocol to an agreement, fraught with intense political emotion. Now, at least, we have consensus guidelines.

We have a level playing field for government and industry and an impetus to learn collectively about the issue, to reduce anxieties, and to benefit from genuine discussion with all partners. This is because in parallel to the implementation of the biodiversity convention, we negotiated consensus biosafety guidelines. These guidelines will serve the community rather well in the interim while the decisions about a formal legally binding protocol take their place.

If one understands the life cycle of various issues, for example, we can see that the chemical agenda clearly benefited from the concept among partners that was the comfort among partners, that was achieved through voluntary agreements being in place for a number of years before moving to legally binding negotiations such as on the prior informed consent agreement.

Synergy Needs
And, finally, not the least significant of questions that I think that has to be asked is whether or not we have found ways of really bringing about integration and synergy among individual laws and their institutional mechanisms. In my view we have a very long way to go in being able to achieve that, either substantively or for reasons of administrative efficiency and effectiveness. It seems to me that we still have much too much a case of fragmentation in the international system, with its resulting dissipation of both energies and resources.

International Institutions
Now, if those are the questions that I would ask about international law, let me turn for just a moment to the question of institutions. I think there is one thing that has been recognized, almost unanimously, and that is the genuine need for a strong independent advocate for the world's environment. But, from that point on, opinions diverge significantly as to what the nature of that institution should be.

Proposals
Proposals include such things as an environmental institution endowed with considerable law-making and enforcement powers. Some have called it a World Environment Authority, which implies a central agency setting global standards and possessing the ability and resources to actually enforce those standards.

Notwithstanding some of the more complex legal issues which arise, or even questions of principle that some governments would raise, or how desirable such an arrangement would be, there are some who think that this is an idea whose time has not yet come.

New Suggestions
There are many other suggestions being put forward, particularly in the context of the UN reform. These include:

the notion of an "environmental security council,"

the modification of the trusteeship council to manage the global commons,

the creation of a global environmental organization as an operating agency,

consolidating work within the international system, not just supplementing it by undertaking actual projects,

pursuing system-wide coherence, avoiding unnecessary duplication while still encouraging each part of the system to be able to play its part.

UNEP
It would be very easy for me to stop at this point and go into an advertisement for the organization with which I am most familiar, the United Nations Environment Program, and in fact, it has much to recommend it.
Over the last twenty-five years it has done much to advance the environmental cause. It has brought the environmental perspective to the ongoing debate on international trade. It has brought the environmental perspective to the debate on poverty. We have succeeded in bringing the environmental dimensions into such subjects as financial services, banking, and insurance, and in doing so, we have strengthened the voice of the environment and the role of fledgling environmental ministries nationally.

That is how UNEP has helped to integrate environmental sustainability into economic and social concerns. But there clearly is much more that an international institution must do. Certainly, many of us here, and many more around the world, are sensing the need for an organization that not only speaks strongly on behalf of the environment, but one which goes beyond speaking and is truly capable of catalyzing action.

Catalyzing Action
This is action that brings about real and measurable improvement in the quality of the world's environment and thereby to the quality of life of people living in and depending on those environments. That is the ultimate deliverable.

To be able to catalyze action, an organization must have full command of relevant information, the capacity to interpret data in the development of knowledge and the ability to translate that knowledge and wisdom which informs policy development. These, together, form the intellectual basis of an "organizations authority" for management of environmental disputes.

We are at a point where the world does indeed need a custodian of the environment. UNEP is an organization with the power and the credibility to assert the needs of the environment wherever they are threatened. An environmental guardian for the whole world; North, West, East, and South. It is a strong voice for the protection of the environment and most definitely a tool for environmental protectionism.

Three Fronts for Reform
Let me then conclude by talking about the one other area of reform that I think is necessary. We believe that progress on any of these environmental issues can only be achieved if we move forward simultaneously on three fronts.

One, of course, is sound science, and you heard the first thing this morning from Professor Molina about the importance of sound science.

The second is effective public policy. And, in fact, many of you in this room are very much engaged in trying to bring about effective public policy.

The third is building social consensus. And that is where it gets messy. Most environmental problems are not simply scientific and technical problems; they are economic, social, and political. What we need to do is to be able to have the kind of environment in which we benefit from individuals and civil society at large.

Poets & Engineers
We need both poets and engineers to be able to bring about a real difference. We must have faith and trust in people's common sense and willingness to act when they understand the issues that are really at stake. We have to focus on the most effective ways to build people power.

Environmental activism is most effective at the local level when people discover that they have shared problems. If you look at the history of environmental conservation, it shows that we have succeeded where we consciously and systematically focused on building a political base of support within the public.

Efforts to preserve and improve the environment are sure to be set back, if not fail outright, when advocates for the environment forget or ignore the fact that environmental causes are just as political as any other public issue.

Conceptual Ambiguities
There are a number of problems that we still face. I want to end by touching on just one, and it may be viewed as heresy, especially among a group of people who are here because of the concept of sustainable development. We are still facing a difficulty in understanding this very concept of sustainable development.

People can relate to the environment. We all know by common sense that our actions and our behaviors directly affect the quality of the environments in which we live. It is hard to relate as people to complex and fairly technocratic concept of sustainable development. We are disempowered as individuals.

Active Agents
The possibility of becoming active agents of change seems to be pushed further away from us. We're distanced from the movement by the concept. Sustainable development challenges us intellectually, but environment is something that we feel.

You do not sell an after-shave lotion by listing its ingredients or usually even a car by its features. You sell the feeling, the emotion. And I think that that may be one of the few things that we lost at Rio.

Losing "Touch"
We gained a lot of logic, but we may well have lost the human touch. My mother understands what it is to work to protect the environment, but she does not have the same feeling about what it means to bring about sustainable development.

There is no question that this world of difference and indifference is going to need very powerful instruments of governance.

Caring & Passion
But, I end by saying that of even greater importance is that this world is going to require thinking, caring, and ethical human beings that allow themselves to feel passion, a passion for the people with whom they live, a passion for the environment, and certainly a passion for life.

And, I hope as we analyze (to death) the successes and the failures that we have achieved post-Rio, and we look at laws, and we look at mechanisms, and we look at institutions, that we will not ultimately forget that what we have to focus on is the individual attitudes and behaviors of every citizen on this planet.

Cornelia Quennet-Thielen:
Thank you very much, Liz, for this very rich and engaged analysis of the ongoing developments regarding international law, its innovative features, its accomplishments, but also the still very major challenges that lie ahead of us. Thank you also for the extension of your keynote to the institutional question and the ongoing debate that we will have to face in the way up to the Special General Assembly next year on how best to deal with environment and sustainable development in the international institutional system, especially in the United Nations.

You have set the stage very well for the rest of this session. I am delighted now to turn to the first of our panelists for this afternoon, Mr. Omar El-Arini, who is the Founding Director of the Secretariat of the Multilateral Fund for the Implementation of the Montreal Protocol.

Mr. El-Arini got his education in Egypt, the United States, and the United Kingdom. He was working in my country, in Germany -- I could recognize in the chemical industry -- and then directed a number of research programs and efforts in his own country, in Egypt. He will share with us the experience with the Multilateral Fund, which is the first global fund for environmental management. This will be a very good supplement and enrichment to Ian Johnson's assessment of the Global Environment Facility this morning.

This experience is especially relevant at a time when the Montreal Fund is up for a major review, and its replenishment (hopefully). There will be a good replenishment at the next Conference of the Parties in November in Costa Rica.

Experience with the First Global Fund for Environmental Management
Omar E. El-AriniChief Officer, Secretariat of the Multilateral Fund for the Implementation of the Montreal Protocol

It is indeed an honor for me to be here. It is also a pleasure to speak to you about the Montreal Fund. This morning, I did not hear one word about the Montreal Fund. The first person who spoke about the Montreal Protocol this afternoon was Ms. Dowdeswell.

Montreal Protocol
The Montreal Fund for the Implementation of the Montreal Protocol provides developing countries with access to the funds, expertise, and technologies needed to implement the provisions of the Protocol. The Fund represents the cognition that comprehensive action to end ozone depletion would require the active participation of all nations and led the parties to the Montreal Protocol to create the Montreal Fund in 1990.

At the same time, they also recognized that developing countries would require more time to meet the requirements of the Protocol than developed countries, resulting in different sets of target dates for the two groups of countries.

With these provisions in place, the Montreal Fund has been able to set the standard for effective North-South cooperation in international efforts to resolve global environmental problems.

Basic Features
The most salient features of this North-South cooperation are common but differentiated responsibilities for developed and developing countries -- a partnership between developed and developing countries based on equality rather than dependence. The Montreal Protocol is a dedicated environment fund with a specific mandate and time frame.

The Parties to the Protocol broke new ground with their recognition of the importance of developing countries in the race to save the ozone layer. Only through the active participation of all countries could the emission of ozone depleting substances be ended, and thus industrial countries, which were the major source of ozone-depleting substances, recognized their responsibility to assist developing countries in meeting the financial and technological course of adherence to the Protocol.

In addition, it was agreed that developing countries would have a ten-year grace period, with complete phase-out targeted for the year 2010, thus avoiding impediments to needed development and providing a further incentive to encourage ratification.

Status Today
Today, 157 countries, of which 112 are developing countries, have ratified the Montreal Protocol. To insure an equal partnership in the implementation of the tasks ahead, the responsibility for the management of the Fund was given to an Executive Committee which was structured with carefully balanced participation by developed and developing countries.

The Executive Committee consists of seven parties from developed countries and seven parties from developing countries. Although the policies and funding levels for the Montreal Fund are determined by the Conference of the Parties of the Montreal Protocol, the responsibility for overseeing operation of the fund rests with the Executive Committee.

The Fund was established as an environment rather than a development fund. The specific mandate is to meet the agreed incremental course and curb by developing countries to eliminate the use of substances that are controlled under the protocol within agreed time frames. The United Nations Development Programme, United Nations Environment Programme, United Nations Industrial Development Organization, and the World Bank are the Fund's implementing agencies.

Activities to Date
What has the Fund achieved to date?

First, we have obtained the commitment of the parties. The commitment of the developed countries is very clearly reflected in the very high rate of contributions, which is currently above 80 percent of the total amount pledged, and by developing countries and their high level of participation. It is further reflected in the strong working relationships which have developed in the operations of the Executive Committee.

With the industrial and developing countries participating with an equal basis, the Executive Committee has successfully resolved many conflicts and potentially divisive issues, and has operated by consensus without the recourse to formal vote since its inception.

The second achievement is the accelerated phase-out of developing countries; as of May 1996, a number of projects have been approved and funded, which will, when completed, eliminate much of the total ozone consumption in developing countries.

This would enable more than 50% of developing countries to meet their target of the Montreal Protocol before the year 2010. The fund has been also the main vehicle by which ozone benign technologies are transferred to developing countries. In all use of sectors, environmentally safe and proven technologies are available and are being transferred to developing countries.

Third, it has contributed to technological innovations. I would like to add here that some of these technologies are being introduced at the same time that they are adopted in the industrialized countries.

So far I have painted a very rosy picture of the Montreal Fund, but we do have some important challenges to face. The support and the response from both developing and developed countries bears witness to the success of the Montreal Fund -- the living up to its mandate, or providing an incentive for early phase-out of the ozone depleting substances.

Current Challenges
The challenges are mainly three.

First is the challenge to keep up the momentum that the Chair just mentioned -- as in Costa Rica's replenishment for the third tranche of the Multilateral Fund, which will hopefully be successfully concluded. Nobody should be complacent about donor fatigue. We have seen this too many times, therefore the sustainability of the momentum that has been created by all the parties to the Montreal Protocol should be maintained.

The second challenge is how to strengthen the program level management, especially in developing countries, where institutions have been created through financing from the Multilateral Fund; such an issue did not exist before. The question is how best to coordinate the work of four international implementing agencies, how to respond to the needs of consultants, and how, in the same time, to synchronize the program of investment projects with the commitment of the country and that of the Montreal Protocol.

The third challenge is the development of innovative approaches to assist, first of all, low-consuming countries (in terms of those competing substances) and also low-consuming enterprises.

The Fund covers only the incremental costs incurred by enterprises. In order not to distort the market situation in a country, low-consuming enterprises cannot be given the same degree of sophistication and technology as the large-consuming enterprises. This situation is causing a challenge to the management of the Multilateral Fund, and the issue is being continuously considered by the Executive Committee.

The last challenge is how to deal with a fund that was intended for the environment, especially when implementing agencies of this Fund, namely the United Nations Development Program, the World Bank, and the United Nation Industrial Development Organization, have always dealt with funds (trust funds mainly) for development. This issue has been on the agenda of the Executive Committee since its first meeting on September 19, 1990.

Environment-Development
The environment-development issue is still very much alive, but we are happy to see change in mindset in these three international organizations, and we hope that this will continue until indeed they turn this Fund, and hopefully future funds, into truly environmental funds.

Thank you, Madame Chair.

Cornelia Quennet-Thielen:

Thank you for this analysis of the Montreal Protocol Fund. From my own experience in preparing for Rio and negotiating the conventions, I am absolutely convinced that without the Montreal Protocol Fund, we would not have been able to get the Global Environmental Facility as it stands today. So, you really have laid the groundwork for a lot of other developments.

Our next panelist is Mr. Goran Persson. Mr. Persson, from Sweden, is Managing Director of MISTRA, the Foundation for Strategic Environmental Research. Dr. Persson has served as Deputy Director General in the Swedish Environmental Protection Agency and then as Undersecretary of State in the Ministry of Environmental and Natural Resources prior to joining MISTRA.

MISTRA focuses on solution-oriented research guided by long-term vision and clear goals. It is no surprise that Mr. Persson will share with us strategic priorities in international research endeavors.

Thank you very much, Madame Chair. I am very grateful for the invitation to this meeting, and I consider it a privilege to share with you this afternoon some thoughts about strategic priorities in International Research Endeavors towards sustainable development.

New Directions
The concession to our effective understanding of sustainable development requires us to engage in a set of radically new attitudes and solutions. This concession is the biggest challenge our societies have faced, and will require a broad mobilization of research and development. The environmental dimension is very important for sustainable development. But the social dimension, including economy and equity, is equally important.

Equality
Global sustainability is impossible without equality between individuals, groups, nations, and between North and South. Perhaps global sustainability is a utopia, but the need to reduce global unsustainability is a reality. What type of research is needed to deal efficiently with sustainable development?

Research Organization
I am not going to discuss different subjects for research but will give you some thoughts about the organization of the necessary research. On one hand, we need to know the threats to sustainability, and on the other, how we can avoid them. We must work with both problems and solutions.

If we look at the environmental dimension and the research activity in environmental sciences, it is absolutely clear that the priority has been on studies of different impacts on the environment, including individual organisms, ecosystems and human health. There is, of course, a logical reason for that. You have to know the problems before you can work on the solutions. But there is also another reason for the existing priorities.

Studies of effects on ecosystems and human health can be conducted within the traditional disciplinary context. By contrast, solution-oriented research programs must be interdisciplinary, and the project within such programs integrated and not only coordinated. The environmental and socio-economic dimension must be merged, and the users brought into focus.

Communication Needs
It was said earlier this morning, that communication is a problem. I think therefore that it is absolutely necessary to engage the users of research at the very early stage that facilitates communication and information about research results.

In the Foundation for Strategic Environmental Research, we have experience with the difficulties of interdisciplinary and integrated programs, and similar experience is reported from other funding organizations who want to support interdisciplinary programs in this area.

Quite apart from the conceptual difficulties, I believe that further obstacles to interdisciplinary change exist in the personal and psychological spheres. Interdisciplinary change calls for highly developed individuals and the broad base of knowledge. A certain courage is required to abandon the comfort to specialize, to operate with the bounds of a specific discipline and move on to the exposed ground of interdisciplinary exchange.

Therefore, sustainable development requires a new kind of knowledge production. The main strategic priority in international resource and diverse powers sustainable development is more solution-oriented, interdisciplinary, integrated programs with clear goals and measurable milestones in closed context with users and decision makers.

New Knowledge Production
Such programs have to be long-term and contain both basic and applied research projects. It is the responsibility of the founders of research to make sure that you can fund long-term programs, including both basic research and applied research.

"If it is not counted, it tends not to be noticed," to quote John Kenneth Galbraith.

It is the level of sustainability on board the spaceship Earth that is decisive for our survival. To achieve sustainable development globally, changes have to be introduced at national, local, and corporate level indicators of sustainable development are needed to measure direction of change at all levels and to simplify, quantify, and communicate the very complex phenomenon.

Indicators
A call for indicators was given in Agenda 21, and I quote:

"Indicators of sustainable development need to be developed to provide solid basis for decision-making at all levels and to contribute to a self-regulating sustainability of integrated environment and development systems."

So, priority should now be given to the development of a subtle indicators to measure national progress toward sustainability. And, it is important to agree on one basic set in order to have an impact in the corridors of power in national governments. If we have a number of different sets of indicators, it will have no impact.

It is a challenge, but not an absolute necessity to select indicators which can be summarized to a sustainability index comparable with a gross national product, but in this case, measuring true welfare. Such an index will strengthen the commitment by governments.

Modest Progress
The progress at the governmental level after Rio is not very impressive. Governments seem to be in the same situation as progressive companies were ten years ago. At that time, environmental matters were delegated to environmental departments and not discussed in the corporate board rooms. It was not until environmental policies were decided by the boards that we saw real improvements at the corporate level. Governments, even today, leave the matters of sustainable development to environmental ministries, which have to negotiate with ministers of industries, with ministers of transport, with ministries of finance, etc. Instead, sustainable development policies must be decided by the government as a whole and leaving the implementation to ministries and an effective follow-up of that.

It has been accepted in principle following the Earth Summit that every nation will provide an annual report of its performance toward sustainability, and globally agreed indicators are necessary to put pressure on the national governments.

Sustainability Indicators
Public programs and governmental policies must be evaluated against sustainability indicators. Today, business executives all over the world are preparing for the advent of ISO 14000, the series of environmental management standards. When do we get the system of quality insurance for environmental management at the government level? I believe this is needed.

Perhaps the most interesting and promising work on indicators of sustainable development today is performed at the local level in connection with the concept of sustainable local development, and this has also been said before this morning.

It is important for the funder of that type of research that the resource is available, not only to a scientific and technical community but also to involve major stakeholder groups. So another strategic priority in international research endeavors is the strong methodology to mesh a progress, or decline a real wealth and welfare at the national level.

Practical Issues
Rethinking of the fundamental principles of economic indicators is strongly needed. Innovative thinking is thus necessary in order to find environmental and social indicators and to reach worldwide consensus on the system of sustainable development indicators.

Let me conclude by saying, if I have criticized the work at the governmental level, I know that it is very difficult to be in the government. Sometimes, practical politics tends to neglect facts.

However, in the long term I believe that new facts from research and development are crucially important for governmental decisions and for sustainable development.

Thank you.

Cornelia Quennet-Thielen:

Thank you very much, Mr. Persson, for adding another facet to our discussion this afternoon.

I will now turn to Mr. Peter Fox-Penner who is an Assistant to the Deputy Secretary of Energy of the US Administration, specializing in technology policy research and development budgeting and management as well as energy and environmental policy issues. He spent some time earlier as Senior Advisor for technology policy in the Office of Science and Technology Policy in the White House, and before that he was Principle Deputy Assistant Secretary for Energy Efficiency and Renewable Energy.

I thought that only in Germany we have very long titles, but I think the same may be true here; you can compete with us on lengthy titles. Your focus this afternoon is on the subject of "progress and promise" of the Clinton Administration's efforts in fostering sustainable development. This is an issue of great interest to all of us, especially as we are approaching the next Presidential election. We have heard that this is an issue, but also a limited issue in American politics today, as Mr. Lash said this morning, with reference to the campaign.

Thank you Cornelia, for that introduction, and I think there is an election coming up. Some of us are aware of that. Good afternoon to all of you. It is a pleasure to be here amongst this august, very, very distinguished group, and talk a little bit about the Clinton Administration's progress and promise on sustainable development.

When we talk about sustainable development in the Clinton Administration, the very first thing that springs to everyone's mind, of course, is the President's Council on Sustainable Development.

PCSD
The President's Council is a very important endeavor. It is emblematic of the President's and the whole Administration's commitment to the concept. The tenor of my remarks today will be that it is, please don't make it the only thing you think of as the Clinton Administration's efforts in sustainable development, nor is it probably the most significant. But it is very, very significant.

Outreach
The President's Council is a very remarkable body that has produced very remarkable results; it consists of 25 leaders co-led by a leading environmental organization figure, Jonathan Lash, as well as the head of Dow Chemical, one of our leading manufacturing firms.

Outreach includes fifty meetings over a two and a half year process, and quite a remarkable result, a consensus document that put forth a recommendation towards the establishment of sustainable development indicators, specific ones, monitorable ones, and in its own words "scores of recommended actions," actions to change governmental processes at all levels and a number of other changes.

Vision
And also, very importantly, is a vision statement: a vision of the United States as a sustainable economy and as a leader in the world's sustainable development community. It was also quite politically significant for those of you who follow this process. The Report came out just at the time when the new republican congress was sort of getting cranked up with a campaign to roll back environmental laws. That was one of their campaign platforms; and I think they had expected this group, because it was half industry and half environmentalists, you might say, to essentially reach a very conclusionless document.

In contrast to that, one of the firm statements that the President's Council consensus report says is that it does not believe that roll-back of environmental laws was appropriate. And, this was front-page news in the United States, and it really was the first sign that the Republican Congress had grievously misjudged the American people's commitment to the environment, the American electorate's commitment.

Key Changes
It was politically significant as well, in the short term, and certainly a remarkable achievement overall. But I would like to point out three, also remarkable, and equally significant sorts of change that I have been a part of in the four years I have been in Washington.

System Inclusion
The first change is the system, or what I would call the systematic inclusion of global and also domestic environmental issues in the whole US foreign policy and stateship apparatus. This is more of a domestic change, but it has great implications for sustainable development.

Gradual Modification
The second change is what I would call the gradual modification of traditional environmental analysis and the surrounding political coordinations and controversies in a manner which reflects a more enlightened view of the environment. By that I mean a view that the environmental protection measures and sustainable development measures are not in some sense a drag on the economy. They do not harm economic growth. They do not harm the creation of jobs, and that has been the traditional thinking since the 1960s, certainly in the US by what I would call the less progressive people on the environment. You see a real shift away from that built into the domestic political apparatus, certainly the administration's domestic economic and political apparatus, and I think that is very significant.

New Style
The third change is the change in the kind of people that we have tried to be and that we have tried to bring in to the government, and I will just touch on that briefly at the end.

In order to save time, I will touch on all of these briefly, but the third one most briefly. I had to say that, Madame Chair, in the interest of the clock.

Environment in Foreign Policy
As to the inclusion of environment in foreign policy: one of the very first things the President did, or one of the first things he did as he was picking his cabinet (and many of you know this), was that he created, for the first time, an Undersecretary of State for Global Environmental Affairs. And not just anyone, but he picked one of the co-chairmen of his presidential campaign, a long-time colleague of the Vice President, and of course I am speaking of Undersecretary Wirth.

At the same time, inside the National Security Council, which had been traditionally a military security organization, he put in a full-time environmental staff member and in the Office of Science and Technology Policy in the White House (which I had the pleasure of serving in) -- there are four divisions in this organization, OSTP, and there is an international division and an environmental division.

The Environment Division was headed by someone whom many of you know, our good friend, Bob Watson, who led the US delegation in the IPCC negotiations and then also in the international division, which had traditionally focused on national security issues; suddenly it focused quite a lot on international environmental issues.

So built into the very fabric of the government and our whole decisional process and staffing process, you start to see the environment and foreign policy being joined. This has resulted in some very, very important seminal cross-fertilizations and collaborations.

A particular one I will mention is that one of our national laboratories that specializes in national security research and generally does very confidential, very leading-edge modeling research has hired one of the leading figures in the nation, Brad Allenby, author of the seminal Industrial Ecology book (for those of you who follow that), as a Vice President for work on links of national security research with cutting edge environmental and industrial ecology research. Brad told me recently that he was very surprised and very pleased when he was putting together a conference on environmental issues, industrial ecology, and their relationship to national security, and he got a call from the Army War College of the United States.

For those of you who do not know, this is one of the schools that trains our best army officers, and it has been very traditional up to now, and we were all sort of pleased and saw it as a sign of change that the Army War College called to participate in this conference.

Inside the State Department, Secretary Christopher, in addition to giving Undersecretary Wirth a very important portfolio, has himself made a number of important changes -- he himself, after hearing probably the first briefing any sitting Secretary of State heard on global climate change. Certainly, one of them asked that all members of the Department in the field, senior members, be briefed on climate change, and he made a wonderful speech at his own law school, Stanford, in April, in which he pledged two important things.

Pledges
The number one pledge is by next Earth Day to put out a global environmental report card on our progress within the US on global environmental accords.

The second pledge he made is by the end of 1997 to host a conference on our progress -- both the US's progress and everyone else's progress -- in meeting their commitments under the growing number of environmental accords that Elizabeth spoke so eloquently about just earlier.

Many of you followed Undersecretary Wirth's leadership at the Cairo conference, and we are proud of that, and Vice President Gore's leadership at the World Bank, when he spoke very, very eloquently about the need to build environmental considerations into multilateral lending policies. And, of course, there is our recent change of policy in Berlin on climate change that is also joining once again leadership in sustainable development with foreign policy.

New Decision-Making
Let me turn now to the second issue, which is the modification of economic and political decision-making processes and analysis. I spoke of the traditional view, which views environment as a drag on the economy.

In some sense by demonstrating very strong economic performance over the last four years, we have created more than 10 million jobs here in the US. We have record highs in the stock market, we have record high business investment, record low unemployment and inflation combined, and at the same time reducing the national debt four years in a row, the first time that has happened since the Civil War in the United States.

These are the President's proudest accomplishments (and you have heard them if you have watched TV lately). In addition to accomplishing those two top-tier economic objectives, the environment has clearly been a priority for the Administration, and by simply combining all of those things in one administration, we have started to change the tenor away from an administration of the United States government that is only pro-business, pro-investment, creates a strong economy, and is really one of the most fiscally responsible administrations to be in office.

I would submit to you as an economist in the last sixteen years, it is also a strong environmental administration. And that, in itself, sends a strong message. Broadly speaking -- but I think in many smaller and noticeable ways -- when you look at the analyses that people do inside the government, and the mechanisms and policies that they have adopted, more and more environmentalists and environmental representatives inside the government, people in EPA, are recognizing that they must be flexible towards businesses and that they and we must establish environmental policies that help employment, help businesses invest.

At the same time, businesses are seeing that the environment -- and that environmental regulations -- can actually become instruments of competitive advantage, productivity enhancements, and so on.

Emission Trading
I wish I had time to go on with this -- maybe I will just mention one particularly significant undertaking in this, and that is (this is one of many I could pick from and possibly not even the best) the trading program, i.e., the emissions permit trading program under the Clean Air Act.

It is a bitterly contested program that took many, many years to adopt, and it was predicted during the debate over this bill that if we put a cap on sulfur dioxide emissions in our power plants, coal burning power plants principally, it would cost many hundreds of dollars per ton for a utility to have to either alter its processes or buy an emissions permit, but nonetheless we went ahead.

Today, most utilities who originally opposed this saw that this market based approach has really given them tremendous flexibility; it has worked far better than even many environmental proponents thought it would work.

It has not been administratively burdensome, and the price today of emissions allowances, which any one of us can buy, and indeed some environmental groups do buy and retire, is $75 or so a ton. So, the whole notion that the environment and the environmental programs can be joined with the marketplace and not prove to be as big a drag on businesses has really permeated the thinking at all levels of the government, and that has really changed the way we think about regulations. It changed the way we view economic evaluations of our programs.

Personnel Matters
The third item I mentioned is our change in personnel. Elizabeth, I want to particularly dedicate this story to you because of your very moving and very appropriate remarks about how people feel about what they are doing and the passion that they have to bring to their jobs.

When I came to the Department of Energy four years ago, I was a consultant that studied energy efficiency programs at electric utilities, among other things, and as some of you may know, the electric utilities in the United States, over a period of ten years, have one of the largest energy efficiency and pollution prevention programs in the history of the world. Collectively, the electric utilities in the US -- and not always willingly, but in some cases prodded by government rules and regulators -- spent as of last year about $2.3 billion on energy efficiency programs, all of which are excellent pollution prevention programs and many of which create jobs and save consumers money, and they are really win-win situations.

To give you an idea of how much money that is, that is more than double the federal government's budget, the entire federal government's budget on energy efficiency technologies and renewable energy technologies, and that is just private sector funding for energy conservation. That is a very impressive program.

When we came to the Department of Energy, I came to the unit that has the responsibility for energy efficiency programs and renewable energy programs. We looked around and there was only a single employee in the department who focused on utility energy efficiency programs -- who knew anything about them, who could speak the language, and who knew the people, and she had been there almost 20 years.

She is about ten years older than me, and one of the first things we did, of course, is we beefed up that area because this is a very, very important undertaking, it has been one of the anchors of the whole climate change action plan. Our Administration's response to the Rio accords is very much focused on these utility energy efficiency efforts. We had a single person working on it. She was very dedicated and wonderful. Well, just a few days ago, she asked to make an appointment to see me.

To my astonishment, as she started to tell me about how sad she was that she was leaving, because she had been in the department 20 years and she had never been around colleagues in her whole 20-year history. She had never been around colleagues who cared about what she did, who were excited about what she did, who were supportive, and to my astonishment, she started crying, and she said, "Peter, you don't know what it's been like to be here for 20 years."

We certainly need to leave a government that has more people like that in it.

We are very happy that we have hired a number of colleagues, and we will not all be leaving. We have to remember that government is composed of people, in the last analysis, and if those people care about what they are doing, if the environment is of value to them, and they are able to balance environmental and economic needs, I think ultimately we will get down the road towards a sustainable future.

I want to thank you all for listening, and for allowing me to come here today. I would like to thank Nazli for extending the invitation. It is always a pleasure to come up to MIT. As many of you know, I am from Boston originally, and it is always a pleasure to come back here. And, with that, thank you very much.

Cornelia Quennet-Thielen:

Thank you, Peter, and good luck.

We now return to MIT, finally in this session, and I am delighted to give the floor to Professor David Marks, who is working here at MIT with the Center for Construction Research and Education and the Ralph Parsons Laboratory for Water Resources and Environmental Engineering, both at the Department of Civil and Environmental Engineering.

He will address the issue of the evolving importance of industrial voluntary proactive organizations. I believe that issue touches on one of the areas where we really have seen innovative partnerships in that process after Rio.

A professor of engineering at MIT is smart enough both to walk and chew gum at the same time, but not smart enough to talk without slides at the same time.

My topic is to talk about the role of industry, and normally when we come to conferences -- this is a much better conference than the last time Nazli, because last time it was just assumed that technology had no role and there has actually been some mention of technology here -- invariably, in talking about global accords, the idea is that we will tell them what to do, we will negotiate carefully about what to do, but we will tell them what to do, and then we want the regulatory power to make sure that they do it.

It is an interesting question about who they are, but there is always this sort of question of doubt in your mind as to will you tell them to do the right thing, and in fact, will you sort of tap this incredible rolling, evolving technology trend that is going on, the faster and faster technology changes, the faster you can tap that to your best interest.

"They" as Industry
They is industry and to a certain extent I am interested in this because as a professor in a technologic institution, we produce the people who go into that industry. And there is a tremendous change going on, and the question really is are there evolving groups or global trends within industry which are trying to respond to this desire for sustainable development at the same time, and if there are, what are their characteristics.

I can tell you first of all that there are movements like this, and their characteristics are basically to try and take back some of the power away from some of the regulatorists, so that in fact the technology that is developed -- the changes that are made -- is consistent with the economic goals. So you will hear organizations like the World Business Council for Sustainable Development, with its mantra of eco-efficiency, which is almost true, but not all of the changes that need to be done are, in fact, eco-efficient.

Society must always have a role in setting the limits and must always look at ways of making the limits. Industry has to understand how it operates within what is now an evolving set of societal demands, and how it organizes itself and how it anticipates consumer demands, and most importantly, not only how it reacts to these, but how it will go out and influence these. If it does know more about better ways to do CFCs, how does it influence this?

Paradigm Shift
There is a major paradigm shift going on, it is from command and control, the traditional command and control towards pollution prevention. To a certain extent the environmental sustainability people are grabbing hold of the tail of a lion here; it is really not being driven by sustainability concerns, it's being driven by greater concerns for total quality management. It is being driven by having to deal in the globalized market -- in which you must be the least-cost producer -- and it is pretty hard to be the least-cost producer if you are taking energy and taking raw materials and producing an awful lot of waste with it, which you cannot sell, and you have to pay for the waste -- which may, in fact, create liabilities for you.

In trying to see how industry deals with that, we get into some terrible problems of definition. Let us not talk about the definition of sustainability; I think that MIT's sustainability arguments have done well because we have chosen not to define this, but simply to say that we will recognize it when we see it.

But in talking to industry, there is an awful lot of mix-up here between sustainability of the corporation and sustainability and the corporation. Society could get this right, if it in fact it could line up those two sets of concerns so that the signals sent to corporations about what they needed to do were in fact aligned well with its desires for profit-making.

Loop-Closing
There is a very strong mood towards loop-closing, i.e., trying to take in less raw materials, less energy, produce less waste. The interesting question is: Will loop-closing be enough?

We can make these loops tighter and tighter, but it still may not be enough with growing production, greater standards of living, greater population, to in fact, we must still find ways to protect the ability of the environment to deal with what still are waste streams.

Credibility Needs
We have to deal with businesses' perceived need for credibility and the legitimizing of its concerns. Industry has continually shot itself in the foot, saying it cannot do something, and then finding out two years later, not only could it do it, but it could do it very well.

There continues to be a set of concerns now, particularly in the global climate conventions, and in some of the raising concerns -- about chemicals and the environment, in which business has some very legitimate concerns about whether the science is good, whether the process is right, whether there is a rush to judgment. It has found that it needs to look for a way to legitimize these concerns by bringing in other stakeholders, and not by taking its past roles of being obstinate and trying to lobby behind the closed doors.

Competitiveness
Business is also limited by competitiveness. We talked of industry (or the chemical industry, or the chlorine industry, or the freon-producing industry) as a monolithic block, but in fact they are out killing each other. And, you know, it it very hard to find out what Dupont's strategy is about chlorine, and how much chlorine it thinks it will be making and using ten years from now, because it does not want anybody else to know.

Involved in all this is a growing voluntary movement to self-regulation. I would like to take as a case in point the case of the International Standards Organization 14000 (ISO 14000). The international standards organization is not a diplomatic organization, and perhaps before five years ago, its main job was making sure that a Sony recording cassette fit into a Panasonic cassette player. These are the sort of standards it dealt with, and these were voluntary, but companies found that it was a good idea to look at these, but then it made a move. It moved to the ISO 9000 standards, namely, total quality management. Again, these are voluntary.

But we are not talking here whether a tape fits into a tape recorder. We are talking about whether a firm wants to look at total quality management or not.

Self-Regulation
Those voluntary standards surprisingly brought about great efficiencies in companies and have moved through de facto standards. You really cannot do business today if you are not certified under ISO 9000. If you want to do procurement for the United States Government, you had better be certified under this. This certification, while it is one proposed by ISO, is done external to the company by registered certifiers.

Industry (in particular, the big multinationals) moved to this seemingly technical thing of setting up environmental standards of ISO 14000 with a certain enlightened self-interest. They are worried about environmental barriers going up as trade barriers. They are worried about competition from "dirty" places.

They are worried about a whole set of least common denominator problems of the standards -- international standards being set so low that in fact they cannot operate in the United States. But in fact they are doing very well operating in China, but they cannot bring the products here that they are producing.

ISO 14000
So, just about to be proposed is an ISO 14000 set of standards. Everywhere in the world (particularly in Southeast Asia), they are very involved in helping to set these up and get them started. All the major multinationals are attempting to move in that direction. The US firms that do not do much international work are just waking up to them. But I would predict the same process of moving from something voluntary now to something de facto later on will take place very quickly.

Details
The devil is in the details because in fact, just how these are set up -- how specification guidelines and performance evaluation take place -- is still to be worked out. And this will determine how serious it will be. This means that how strong the ISO 14000 moves towards environmental labeling, life cycle assessment, and so on will determine how fast environmental aspects and product aspects will move. Again, they still need to be worked out, and it could go in the direction of being lip service, or it could go in the direction of being fairly strong and fairly positive.

Nevertheless, we have here an example of an environmental accord that did not start out looking like an environmental accord but that in fact grew up in industry self-preservation, wanting to say we can do this ourselves, we can monitor ourselves, and yet it is proceeding greatly.

Limitations
The one fault in something like this is that it is still focused on loop-closing, and we do not know whether loop closing is enough; and it is not at all clear yet how national and international environmental standards will come into focus here. You can, in fact, be certified, right now under ISO 14000 without being in compliance with your own country's regulations -- as long as you can show a trajectory of moving in that direction.

Stewardships
The expected trends are that we will see better loop-closing by product stewardship, thinking of outside use and reuse. ISO 14000 will play a big role. You will see closer cooperation with governments and other stakeholders understanding their needs, anticipating changes, adopting to these changes. Industry understands that it must start talking to its stakeholders. There have been some movements in this direction, but I think it will become more intense. You will see a very careful shadowing of the science process.

In the matter of global climate, we are already seeing this shadowing of science. Some parts of industry are paying people to say, like Chicken Little, "The sky is not falling." Other parts of industry are, in fact, watching the scientific process very carefully, to make sure that it is correct, and if it is correct, they expect to go along with it. But they do want to make sure, and they are buying their insurance to make sure that this is happening.

New Challenges
Endocrine disruption is something which has just begun to come on the scene. Most of the arguments about toxicity and human health effects have been about cancer; and now suddenly, out of nowhere, seemingly (do not tell Rachael Carson this -- that this has come out of nowhere), thirty years later, there is this interest in reproductional effects.

The industry, largely caught flat-footed by this, is now trying very quickly to understand what the implications are for particularly the industries that use chemicals. Industries will need to learn to act in concert, in consensus-building with stakeholders; it will seek forums and then use those to make its messages clear and have them validated by others. We see this as a role for the universities as a neutral platform on which a lot of these discussions will take place. We also see the university as a place which somehow has to train technical people to participate in this process.

Organizational Changes
The changes that are going on in industry are not just technical, but they are organizational. Different parts of the organization are dealing with this, their planning is changing. And a technologic institution that is simply turning out PhDs to go to industrial research laboratories must now think about how it turns out very advanced technical people who can think in a systematic way and be comfortable in organizational issues as well as the set of issues that are purely technical in nature.

The needed trends too early to predict are the equity questions. It is one thing for Thailand to think about how it sells its products in Europe and whether it has to deal with ISO 14000; but it is quite another for China to think about the fact that it is going to deal with the billion people within its own markets and that it does not have to worry about the fact that it is not certified for selling in international markets.

We will see new approaches to regulation. We are already seeing voluntary self-regulation. That is just a necessary condition. But we will see that this must still be driven by science; it must still be driven by some sort of regulation. And still what we expect to happen is not sufficient. It will be interesting to see how this moves.

In summation, there are major changes going on in industry which are in response to these trends. Such changes are moving in a very positive direction.

Cornelia Quennet-Thielen:

Thank you, Professor Marks. With this we have concluded the round of contributions from the panel, and checking with Nazli, I think we have about five minutes to ten minutes for comments and questions. So let us start quickly.

Question from the floor:

A question for Mr. Persson:

Do you believe that the move toward a sustainable city is one of getting indicators right; but also we need to consider how stakeholders view the issues. Could you comment on that kind of contradiction -- when the best indicator is coming from the grass roots versus when we are going to converge on good indicators from within the research community.

Goran A. Persson:

Yes, we should make a difference between what I call "national sustainability indicators" and those at the "local level."

We have, for example, an exercise in Europe where at the local level, you have the so-called "ABC indicators" developed by a research institute in the Netherlands, where A stands for Area-specific indicators, B for Basic, and C for Core indicators. So, in that case you have only a limited number of indicators that are common to all cities, and these are more specific for different circumstances.

The wish and distinction is by the local inhabitants. At the national level, we have to agree on a set of indicators. So there are two different things, but linked together.

Lowell Flanders:UN-DPCSD

We at the United Nations Commission on Sustainable Development are working on a set of indicators for use at the national level and through the process of consultation with a number of different agencies and organizations including the World Bank and the World Resources Institute.

We have come up with a list of 130 indicators which should have tentatively been approved by the Commission. We are going, hopefully in the next phase, to have some countries to begin testing indicators at a national level to see if they work on the ground. I think Germany is one of those countries that has agreed to try and test this set of indicators and see if we can find, perhaps by the year 2010, a sort of "national indicators."

A comment for Professor Marks: you are probably aware that between 60 and 70 percent of all chemical production, and that includes primers, fibers, chemicals, pharmaceutical, everything, is directly or indirectly dependent on chlorine.

David H. Marks:

I am very aware of that, yes. I have spent many good part of my career about this, and I think that the debate is as to what is the future of chlorine. I do not think we are going back to a pre-chlorine society, but the debate is beginning to focus on the phasing out of those that seem to have high risk and good replaceability, and is staying away from the uses in which there is lower risk and difficult replacing and high value.

I do not think we are going to phase out chlorine in the pharmaceutical industry. We will be chlorinating water for a long time, at least in the United States. But you are beginning to see trends towards this.

A lot of these trends are being driven within industry. I am watching as much as I can as Dow and the other big producers look at their plans for the future, trying to decide where the markets are, which will be under attack, making, in fact, in some cases, unilateral decisions to come out of those markets, and working very, very hard to come up with substitutes. I do not think that simply because something contains chlorine, it is necessarily bad, but, in fact, we are beginning to get a sense of which of those applications are more risky than others, and those are the ones, hopefully where the attack will take place.

Question from the floor:

Could Professor Marks elaborate slightly on a point which he made that struck me very interesting? He said that if the signal that was sent to his industry as to what sustainable human development required would be clearer, would be better lined up with their own concerns, we would have a better chance of moving in the right direction.

David H. Marks:

I see this as a long-term process in which industry works much more closely with the stakeholders. There is more consensus-building.

There is a better look ahead at where the problems are coming from, and anticipation. In fact, industry should never be surprised. Even when it is going to have to take actions which are very difficult for it, they should not come as some article in the newspaper which will drive regulation but in fact, some careful consideration of some of the risk/benefit trade-offs for this, and we have been talking here about new ways of looking at regulation.

It is more a consensus-building, with different stake holders about how this will take place. I think stakeholders will play a main role. But, there are certain experiments that you do not want to carry out in real time with some of these things, and this is leading to a great deal of study as to where they would come. If I had the solution, then we'd move on to another problem.

Comment from the floor:

It is a brief topic: a few months ago, William Saffire, the columnist, wrote an op-ed piece in the New York Times on the new social order (or the new socialists). The way you could recognize these dangerous "new socialists" is that they talked about "stakeholders."

Peter Fox-Penner:

Can I respond to that for a moment: We started using that term in the Department of Energy. The Secretary likes it very much. When we first went to Capitol Hill, they said, "Stakeholders? What are these stakeholders?" So a couple of lobbyists got the idea of, well, if you like, we will call them "oranges," and from then on, they have referred to "stakeholders" and "oranges" to this day on Capitol Hill.

Cornelia Quennet-Thielen:

I think we have come to an end. The good news is we did not extend beyond our one hour and a half. I think the bad news is it is already later than planned because we started so late. Let me first thank you all very much for your contributions this afternoon. I think despite my doubts -- and all of our doubts -- a lot could be added to this morning's discussion, and we will all profit from that today and in the future.